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Peterson v. UnitedHealth Group Inc.

United States Court of Appeals, Eighth Circuit

January 15, 2019

Louis J. Peterson, D.C., on behalf of Patients E, I, K, L, N, P, Q and R, and on behalf of all others similarly situated Plaintiff - Appellee
v.
UnitedHealth Group Inc.; United HealthCare Services, Inc.; United Healthcare Insurance Company; United Healthcare Service LLC Defendants - Appellants Lutz Surgical Partners, PLLC; New Life Chiropractic, PC Plaintiffs Riverview Health Institute, on its own behalf and on behalf of all others similarly situated Plaintiff - Appellee
v.
UnitedHealth Group Inc.; United HealthCare Services, Inc.; United Healthcare Insurance Company; Optum, Inc. Defendants - Appellants Secretary of Labor Amicus on Behalf of Appellees

          Submitted: May 15, 2018

          Appeal from United States District Court for the District of Minnesota

          Before SHEPHERD, MELLOY, and GRASZ, Circuit Judges.

          GRASZ, Circuit Judge.

         United[1] administers thousands of health insurance plans. In the course of processing millions of claims for benefits, United at times erroneously overpays service providers. United can generally recover these overpayments from "in-network" providers because it has agreements with those providers that allow it to "offset" the overpayment by withholding the overpaid amount from subsequent payments to that provider. In 2007, United implemented an aggregate payment and recovery procedure in which it began to offset overpayments made to "out-of-network" providers, even where the overpayment was made from one plan and the offset taken from a payment by a different plan, a practice known as cross-plan offsetting.

         The named plaintiffs in these consolidated class action cases are out-of-network medical providers who United intentionally failed to fully pay for services rendered to United plan beneficiaries in order to offset overpayments to the same providers from other United administered plans. The plaintiffs, litigating under the Employee Retirement Income Security Act ("ERISA") on behalf of their patients, the plan beneficiaries, claim the relevant plan documents do not authorize United to engage in cross-plan offsetting. The district court[2] agreed and entered partial summary judgment to the plaintiffs on the issue of liability. United appealed the summary judgment order. We affirm.

         I. Background

         United describes itself as "the nation's leading health and well-being company." The United-administered health insurance plans at issue here are governed by ERISA as "employee welfare benefit plans." 29 U.S.C. § 1002(1). Many of these plans are self-insured, meaning the plan sponsor (often an employer) funds the plan while United administers it. United also administers fully-insured plans, which it both funds and administers.

         In 2007, United instituted its new aggregate payment and recovery procedure that included cross-plan offsetting. Class actions were filed in 2014 by Dr. Louis J. Peterson and in 2015 by Riverview Health Institute, each challenging United's practice of cross-plan offsetting. Dr. Peterson sued as an authorized representative of his patients. Riverview sued pursuant to an assignment of rights in its patient agreement. United moved to dismiss Riverview's action, in part because many of the plans contained provisions prohibiting assignments. The district court denied the motion. The district court consolidated the two class actions for purposes of discovery and as to summary judgment on whether the governing documents of the United-administered plans authorized cross-plan offsetting.

         United filed motions for summary judgment and Dr. Peterson and Riverview filed motions for partial summary judgment on the issue of liability. The district court denied United's motions and granted partial summary judgment to the plaintiffs. It rejected United's argument that Dr. Peterson lacked authority to sue as an authorized representative of his patients. On the merits, the court reviewed the underlying plan documents and concluded that, of those plans that did address offsetting, "all of those plans explicitly authorize same-plan offsetting; and not one of those plans explicitly authorizes cross-plan offsetting." Applying the factors set forth by this Court in Finley v. Special Agents Mutual Benefit Association, Inc., 957 F.2d 617, 621 (8th Cir. 1992), the district court concluded that United's interpretation of the plan documents was not reasonable.

         The district court certified its summary judgment order for immediate appeal under 28 U.S.C. § 1292(b) and this Court allowed United to appeal.

         II. Discussion

         We will first address whether United's argument regarding the validity of Riverview's assignments from its patients is within the scope of our appellate jurisdiction in this interlocutory appeal under 28 U.S.C. § 1292(b) and whether Dr. Peterson is authorized to bring this action as a ...


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